DM Transactions Up 25%
The total number of direct marketing strategic transactions in the first nine months of 1998 reached 1,325, up 25% from 1,064 during the same period last year, according to investment firm Gruppo, Levey & Capell Inc.’s quarterly DM Transaction Index. Despite the increase, the total reported value of DM transactions fell 24% to $26.3 billion from $34.5 billion, according to GLC. The drop in dollar volume resulted from fewer blockbuster deals, such as last year’s $14 billion mega-merger of CUC and HFS, which formed the membership, travel and real estate services giant Cendant Corp. The biggest deal in the first nine months of 1998 was Office Depot’s $3 billion acquisition of business-to-business cataloger Viking Office Products Inc., which closed in August. Merger and acquisition activity increased 65% (there were 659 mergers, acquisitions and equity investments in the first three quarters this year, compared with 400 in 1997). Equity investments rose almost 200% over the comparable period in 1997. Nearly 43% of all DM acquisitions occurred in three of the 31 industry segments tracked by GLC: catalog, agency and interactive services. For example, in August, multititle catalog marketer Fingerhut Cos. Inc. acquired women’s apparel cataloger Arizona Mail Order for $120 million.
